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Stakeholders raise concerns over Consumer Protection Bill

June 1, 2009

Select Committee on Economic and Foreign Affairs

Numerous submissions were received from stakeholders requesting that the Consumer Protection Bill retain a clause directing food manufacturers and suppliers to continue placing clear labels on genetically modified foodstuffs. A failure to do so would invite a Constitutional Court challenge. Parliament has released a summary of submissions received from stakeholders on the Consumer Protection Bill. The legislation was intended to provide a sound consumer protection regime for the South African market. The bill was the product of a lengthy consultative process initiated in 2004. The department of trade and industry had indicated that new legislation was needed to reduce unfair labour practices, rid the market of low-quality and unsafe products and strengthen enforcement capability.

Stakeholders had raised concerns over the imposition of a legal framework that was too rigid and that would not allow for adaptations in practice over time. The bill would also remove certain common law principles that could raise the prospect of future litigation. Entities within the financial services and airline industries had recommended that they be excluded from the provisions of the bill due to the presence of existing onerous consumer protection provisions in their respective legal frameworks. Small business expressed dissatisfaction with the bill’s proposal to accord large corporate players consumer protection in the same manner as small and medium enterprises. The proposal was that small companies doing business with larger corporates with a minimum annual turnover of R1 million should be exempt from compliance obligations.

Motor manufacturers emphasised that vehicle warranty and maintenance plans should not be construed as a separate agreement but rather as a condition of purchase. A clear definition of direct marketing had to be included in the bill. Stakeholders felt that a consumer’s right to cancel an advance reservation or a booking without paying a cancellation fee would be difficult to implement. Motor vehicle suppliers had articulated reservations over section 20 of the bill that accorded consumers the right to return goods to suppliers and receive a full refund as vehicles automatically shifted from new to second hand status upon registration with an associated drop in value.

Second hand car dealers were particularly concerned with section 55 that would place an arduous burden on suppliers as buyers could simply immediately cancel a sale on the discovery of a latent defect. Questions were, therefore, raised as to the future significance of the “voetstoots” principle. Focus was also placed on the proposed five-year validity period for vouchers and cards with suppliers anticipating increased administrative and financial costs. The airline industry was of the opinion that section 47 on overbooking would force airlines to discontinue open tickets to the disadvantage of consumers and, in particular, the business community.